Transcript: President Obama, Part 2

On Friday, March 20, 2009, 60 Minutes correspondent Steve Kroft interviewed President Barack Obama on the grounds of the White House and in the Oval Office. This is part two of the full transcript. Click here for part one.

OBAMA: Yeah.

KROFT: --it is.

OBAMA: Yeah.

KROFT: Have an accurate picture of how bad it is.

OBAMA: Right.

KROFT: Do you believe that there's still some systemic risk out there? That the financial system could still implode if you had a big failure at AIG or at-- Citi-- Citicorp?

OBAMA: Yes.

KROFT: Citibank?

OBAMA: I think that systemic risks are still out there. And if we did nothing you could still have some big problems. There-- there are certain institutions that are so big that if they fail, they bring a lot of other financial institutions down with them. And if all those financial institutions fail all at the same time, then you could see an even more destructive recession and potentially depression.

I'm optimistic about that not happening. Because I think we did learn lessons from the Great Depression. One of the people, one of the things that I don't think people realize is that the interventions that have been taken, not just by the Treasury, but also by the Federal Reserve Bank and the FDIC, are much more aggressive than anything that we saw back in the '30s. I mean, people had just watched things bleed away for a long period of time before people moved in a very significant way. If you think about what we've done just in the last month around a housing program that has already started to spark-- a lot of refinancing, and starting to stabilize in certain sectors the housing market-- if you look at what we've done in terms of opening up finance windows for small businesses so that they can more directly get the lending that they need to stay open--

KROFT: Without going to the banks.

OBAMA: Without going through the banks. If you look at the significant investments that have been made in the banks to help raise their capital levels so that they're more comfortable over time lending again, all these steps are providing the kind of cushion that you just didn't have in the 1930s. So I'm confident that we're gonna be able to manage our way through this crisis. The-- the question is, are we gonna be able to do so in a way that brings us out quickly back to the point where we're growing at two or three or four percent again. Or do you have a situation like you had in Japan back in the '90s where they went through what's called the lost decade.

They were growing very incrementally. And it wasn't a complete disaster. People weren't on the-- out in the streets and-- you know, people still had enough to eat and a roof over their heads. But the economy was completely sapped of its dynamism. And that's what we're trying to avoid right now. And that's why it's so important for us to get the banks lending again in an effective, aggressive way.

KROFT: You talked about the fact that there are still institutions out there that are so big that if they failed it could have a catastrophic-- catastrophic effect. I mean, even in spite of the fact that we have poured-- I-- I-- I've lost track of how many billions of dollars.

OBAMA: Well, look. The-- as I said, I don't think that they are likely to fail. Because I've said we're going to do everything we have to do to make sure that they don't. We're not gonna allow-- these systemic risks to build up to the point where we've got a major disaster like that.

But it costs money. These are institutions that suffered huge losses. And there-- there's no getting around the fact that those losses were real, and have consequences for shareholders. They don't have consequences for depositors because of FDIC insurance. So one of the things that I think is a huge improvement over the 1930s people can feel safe in terms of their bank deposits. But, you know, you've got real losses here. And the taxpayers aren't covering all the losses in these institutions. What we are doing is covering enough of the losses to make sure that banks are able to stay solvent, and they're still able to lend.

Now we haven't gotten lending out fast enough. And one of the things I get every day when I read my letters is a small business who says, "A bank's pulled back on my credit line even though I've always been a good customer. And in fact, I'm still running a profitable business. But-- the banks feel that they've got to build up their capital, to meet the requirements of regulators. And what am I gonna do about this?"

And so we've still got some more work to do to move from just, you know, keeping a pulse to getting the patient walking again. (LAUGHTER) And that's going to require some significant resources. If we do it right, then the taxpayers are going to get back some of their money. In-- in some institutions we might even make a profit. With some assets we might make a profit. The likelihood, though, is, you know, if you look at previous experiences with the savings and loans crisis, some of the steps that were taken during the Great Depression is there are gonna be some losses there we can recover. And over time, it will be a lot cheaper for us to have intervened aggressively now than for us to have gone ahead and suffered a decade where we don't grow.

KROFT: Is there some limit to the amount of money we can spend?

OBAMA: Yes.

KROFT: Or print trying to solve this crisis?

OBAMA: There is.

KROFT: And are we getting close to it?

OBAMA: The-- the limit is our ability to finance these expenditures through borrowing. And, you know, the United States is fortunate that it has the largest, most stable economic and political system around. And so the dollar is still strong because people are still buying Treasury Bills. They still think that's the safest investment out there.

If we don't get a handle on this, and also start looking at our long-term deficit projections, at a certain point people will stop buying those Treasury Bills. If we continue importing foreign oil so that there are these huge capital outflows, and there's a huge current account deficit, a-- a huge trade deficit with petroleum producers, then over time they've got us over a barrel, literally and figuratively. And at some point they might decide, "You know what? We don't want to-- we don't want to buy-- what you're selling anymore."

And that could present huge problems to us. That's why I'm less worried about our ability to finance ourselves getting through this crisis. I'm more concerned about making sure that once we get past this crisis we start getting a handle on our long-term structural deficit. And the most important thing on that front is dealing with the healthcare issue.

You know, that's why I'm-- I'm always confused. One of the criticisms we've been receiving over the last month, month-and-a-half, is you can't focus on things like healthcare. You've got to focus on the economy. Well, healthcare is our economy. First of all, just from a moral perspective.

If you talk to people out there they're getting killed with rising healthcare costs. But in setting that point aside, we know the population's getting older. We know that under current projections and given healthcare inflation, that Medicare will bankrupt this country. Medicaid will bankrupt state governments. And businesses are gonna be in a very difficult position to continue to provide healthcare to their employees. We know that.

So when I say we've got to do something about healthcare, and we've got to do it now, it's got to be reflected in our budget priorities now-- that's not based on sort of some whim. It's not based on me thinking, "Well, wouldn't it be nice to do healthcare right now." It's not--

KROFT: You think you have to do healthcare.

OBAMA: I think we have to get healthcare done in order to put the foundations for us to be able to control healthcare costs down the road. We've been putting that off for decades. And we keep on saying, "Well, we're worry about it at some other point." And, you know, if you-- if you look at the 1990s, one of the reasons that you actually say wage and income growth among middle class families, and this is a testament to some good policy on the part of Bill Clinton, was that healthcare costs were somewhat modestly controlled during the '90s. And then started spiking back up and have gotten completely out of hand. So our investment in health information technologies, our investment in prevention our investment in things like comparative effectiveness, where we're taking a look at what different states are doing and figuring out who is getting more bang for their healthcare dollar, those are part and parcel of the need for us to control healthcare now.

And so when I make those investments, when I call for those investments in my budget, it's not because I'm not mindful of the deficit down the road. It's precisely because of the deficit down the road that I figure we can't pump that for another four years or eight years until the next time somebody looks up and says, "Goodness, we've got trillions of dollars in potentially unfunded liabilities in the Medicare system. And now we're getting older and everybody's, you know, using the system. And we've got no younger workers who are going be able to pay for this, because we didn't take care of it then."

KROFT: I want to-- before we get on-- go into the budgeting, I want to go back to the-- to the economy. Do you think--

OBAMA: The budget is the economy.

KROFT: I know that the budget--

OBAMA: All right.

KROFT: --is the economy. But do you think that there is-- I mean, do-- do you have any sense of when this might end? Or when things might start getting better?

OBAMA: Well, we're already starting to see flickers of hope out there. You're starting to see, as I said-- refinancings-- have significantly increased. Interest rates have never been lower. That promises the possibility at least of the housing market bottoming out and stabilizing. It's not going to happen equally in every part of the country.

You know, California and Florida were way overbuilt compared to other parts of the country, for example. So they'll have a longer time to work that out. But you're starting to see some improvement on that front. I think that if you look at what's happening in the credit markets there are signs where the Federal Reserve Bank working with the Treasury has helped to loosen up some of those markets. But 2009's gonna be a tough year. And I don't need to tell people that. They're already experiencing it. I think next year-- b-- by the end of this year we will have had the foundations of economic recovery. We will have passed a stimulus package.

We will have passed a housing bill that helps people refinance their homes and-- helps to stabilize home values. We will have-- initiated aggressive small business lending programs so that small businesses can stay on track. We will have passed a budget that makes investments in healthcare and energy and education and starts bending the curve in terms of non-defense discretionary spending.

So there are a host of steps that we will have taken. Those will be completed by the end of this year. And in addition to some good policy and a little bit of luck, as well as the confidence of the American people-- I think that starting next year we're we're going to have seen some recovery. Now employment is what's called the lagging indicator. Typically when businesses start to invest again, it takes a little bit of time before they start hiring again.

And so one of the concerns that we've had is how do we make sure that we keep the-- unemployment rate under control and are helping people who have lost their jobs until we have time for the recovery to actually catch and businesses start hiring again? And I think there's going be a challenge there between getting the economy moving technically and it being experienced by people in their day-to-day lives.

KROFT: Your Treasury Secretary Tim Geithner has been under a lot of pressure this week. And there have been people in Congress calling for his head.

OBAMA: Yeah.

KROFT: Have there been discussions in the White House about replacing him?

OBAMA: No.

KROFT: Has he volunteered to, or come to you and said, "Do you think I should step down?"

OBAMA: No. And-- and he shouldn't. And if he were to come to me, I'd say, "Sorry, Buddy. (LAUGHS) You-- you've still got the job." I think that Tim Geithner is as sharp and as skilled a public servant as we have, who has on his plate an unprecedented set of problems and is under enormous scrutiny and pressure and has been able to handle that scrutiny with grace and good humor.

But look. He's got a lot of stuff on his plate. And what he's trying to do is to work with the rest of our economic team and me to get the banks to lend again. To answer to Congress and the American people and be accountable about how money's spent having inherited I think a bad experience from a lot of people's perspectives about Tarp One.

He's having to deal with an auto industry that is in very, very bad shape. He's having to negotiate with other countries to make sure that our efforts are coordinated. And, you know, he-- he's been doing it-- under a microscope. He is doing a terrific job. And I take responsibility for not, I think, having given him as much help as he needs. You know, this whole confirmation process, as I mentioned earlier, has gotten pretty tough. It-- it-- it's been always tough. It's gotten tougher in the age of 24/7 news cycles. And a lot of people who we think are about to serve in the administration and treasury suddenly say, "Well, you know what? I don't want to go through some of the scrutiny, embarrassment, in addition to taking huge cuts in pay." And so--

KROFT: Have you offered some of these positions the Treasury people would have turned them down?

OBAMA: Absolutely. Yeah. And-- and not because people didn't want to serve. I think that people just felt that, you know that the process has gotten very onerous. And look, that's my problem. That's not the American people's problem. But it-- I-- I need to do a better job of working with Congress to get some of these confirmations through. And-- and to get things moving.

KROFT: You mentioned-- I mean, you talked about Tarp. Your Treasury Secretary's plan, Geithner's plan, and your plan really for solving the banking crisis was met with very, very, very tepid response. And you had a lot of people criticize. You know, a lot of people said they didn't understand it. A lot of people said it didn't have any, enough details to-- to-- to solve the problem. I know you're coming out with something next week on this. But, I mean, these criticisms were coming from people like Warren Buffet, people who had supported you, and you had counted as being your--

OBAMA: And-- and-- and-- and then Warren still does support me. But I think that understand Warren's also a big player in the financial markets who's a major owner of Wells Fargo. And so he's got a perspective from the perspective of somebody who is part owner of a bank. You've got members of Congress who've got a different perspective. Which is, "We don't want to spend any more taxpayer money." You've got-- a whole host of players, all of whom may have a completely different solution. Right?

And you know, one of the challenges that Tim Geithner-- has had-- is the same challenge that anybody would have in this situation. Which is you've got an incredibly complex, tough problem where there are no snap, simple solutions. He's got to coordinate with the Federal Reserve and the FDIC.

He's got to get bank cooperation. He's got to get Congressional cooperation. I've got to provide him the political space to do all this. But people want a lot of contradictory things. You know, the-- the-- the banks would love a lot of taxpayer money with no strings attached. Folks in Congress, as well as the American people, would love to fix the banks without spending any money. (LAUGHS) And so at a certain point, you know, you've got just a-- a very difficult line to walk. Now I'm-- I'm the first to acknowledge, I think, that in terms of handling expectations, I think that-- in retrospect what we should have done is just make very clear at the outset, look, it's gonna take a couple of months for us to sort this through.

It's gonna take-- a little bit more time than we would like to make sure that we get this plan just right. Of course, then we'd still be subject to criticism. What's taken so long? You've been in office a whole 40 days and you (LAUGHS) haven't solved the greatest financial crisis since the Great Depression. That-- but that's okay.

I mean, I think that both Tim Geithner, Larry Summers, you know, myself and the rest of the my team-- understand that-- you know, that's what we signed up for. And, you know, criticism's gonna come. But I-- I just think it's important to understand that under very difficult circumstances the decisions that we've been making, it's not as if we've been standing still. The decisions to provide financing to small businesses, the pro-- the-- the setting up of-- a pool that allows securitizations of auto loans and student loans and so forth to create a market again for that so that some of that credit market start to fall.

I-- all these pieces are being put in place. And-- and I would argue that if we've made mistakes at this point it's been more in terms of our communications strategy and messaging than it's been the actual things that we've done, which, for the most part, the market has responded well to.

One last point I want to make about this-- precisely because we want to get it right, we actually have not spent down the vast majority of the second half of Tarp money that we obtained. Because we understand it's important to make sure that when we do that there's accountability, there's transparency, that people understand exactly what the plan is, that we stretch those dollars as well as we can. And that we build back up a sense of public trust in terms of how this is going.

So it's not as if, you know, we came in-- and-- even though the money was allocated, we just kind of threw it out there to see what would work. We're putting together a very systematic approach that includes doing a diagnostic test on the banks, finding out whether or not this bank or that bank needs this or that amount of help. That's part of the program design that requires some facts that are still forthcoming.

KROFT: I want to talk just a little bit about Detroit. But the last time we talked in November you s-- you were-- seemed very certain that we could not let General Motors fail, go into bankruptcy. That it was too much of a-- of a threat to the economy, too much a threat to too many jobs. Do you still feel that way?

OBAMA: Yes. Now-- I-- I just want to say that-- the only thing less popular than putting money into banks is putting money (LAUGHS) into the auto industry. So--

KROFT: Some 18 percent are in favor.

OBAMA: That's--

KROFT: Seventy-six percent against.

OBAMA: It-- it-- it's not a high number. Here's what I'm not in favor of, just putting more money into the status quo. So if we're going to finance anything at the auto companies, it's got to involve a major restructuring where they prove to me and my economic team that in fact they are a sustainable venture once taxpayers get out of this thing. They have not yet made that case.

And I think that both GM and Chrysler are now in a position where they understand we're very serious. We are not gonna put money in if-- if they can't show us how it is that they're sustainable over the long-term. And they have come part of the way there. They're not all the way there in terms of coming up with that plan. And we're engaged actively with them to see if in fact we can get there. What I won't do is to just waste a whole bunch more money on a management that is not intent on changing their practices.

KROFT: What's your idea of a whole lot more money that-- right now?

OBAMA: Oh-- you know-- even in Washington I think a couple of billion dollars is real money. And you know, we've already put a substantial amount to give them time to come up with this plan. And, you know, time's running out. And if they don't come up with a plan that under some pretty severe scrutiny holds up, then you know, I don't think taxpayers are gonna have a choice.

I do think it's possible for us to come up with a-- a sustainable model. It'll still hurt. There's still gonna be-- there's still gonna be some downsizing potentially in any emerging healthy GM or Chrysler. But I-- based on what we've seen so far, we think it's possible. But so far, at least the auto companies haven't come up with a model that-- that passes the-- the smell test.

KROFT: And if you don't give them more money then they have to file for bankruptcy.

OBAMA: If we don't-- give them more money in a current environment in which car sales for everybody is down, where even Toyota isn't-- isn't making any money, is-- is really strapped-- then they probably would not make it. And-- and the disruptions, not just to the automakers themselves but to their suppliers, to states like Michigan and Ohio and Indiana where you know, the auto industry is-- is so prominent I think would be a huge destimulative effect. You know, just as we needed a stimulus to deal with declining demand, well, it works in the reverse. If you've got huge in-- private sector institutions that simply collapse without any kind of order to it at all, that can put enormous pressure on an already very weak economy.

OBAMA: Well--

KROFT: --the mood and your laughter.

OBAMA: Yeah, I mean, there's gotta be--

KROFT: Are you punch drunk?

OBAMA: No, no. There's gotta be a little gallows humor to (LAUGHS) get you through the day. You know, sometimes my team-- talks about the fact that if-- if you had said to us a year ago that the least of my problems would be Iraq, which is still a pretty serious problem, I don't think anybody would have believed it. But-- but we've got a lot on our plate. And a lot of difficult decisions that we're gonna have to make.

KROFT: Afghanistan.

OBAMA: Speaking of which. Yeah.

KROFT: You said outside toughest decision you've made so far is send 17,000 troops to Afghanistan. What are they gonna do there? And how are they gonna change the situation?

OBAMA: Well, the first thing they're gonna do is to stabilize the southern and eastern regions of Afghanistan where the Taliban have become much more aggressive, much better organized, have been pushing hard. And that makes the entire country very vulnerable. So we had to beef up our troop presence there. There's an election that's taking place in August. And we've gotta make sure for the legitimacy of the Afghan government that there is a fair and free election.

And the safety and security situation is always severe. It was in Iraq, whenever we had elections in Iraq. The same is true in Afghanistan. And keep in mind we've got a much smaller number of troops in Afghanistan even with these additional 17,000 than we had in Iraq.

And so there's a lot of pressure just to make sure that the security functions are taken care of over the next several months. The next stage is to rapidly ramp up the training of Afghan forces. And so there'll be a substantial number of trainers among these 17,000 who are helping to train Afghans to provide the security necessary for that population. Now beyond that everything else is still resting on the strategic review that we're conducting. It's almost wrapped up. It's something that I called on as soon as I came into office, because I felt as if our mission in Afghanistan had started to drift.

And after years and thousands of lives lost and billions of dollars spent what we've done is we've moved al Qaeda from near the Pakistan border on the Afghan side to near the Afghan border on the Pakistani side. But they still pose a severe threat and a safe haven. And one of the things that I've asked my team to do is to say, looking at this overall theatre of Afghanistan and Pakistan, how do we approach this and stay focused on what our central mission should be. Which is--

KROFT: What-- what should that mission be?

OBAMA: Making sure that al Qaeda cannot attack the U.S. homeland and U.S. interests and our allies. That's our number one priority. And in service of that priority there may be a whole host of things that we need to do. We may need to build up economic capacity in Afghanistan. We may need to improve our diplomatic efforts in Pakistan.

We may need to bring a more regional diplomatic approach to bear. We may need to coordinate more effectively with our allies. But we can't lose sight of what our central mission is, the same mission that we had when we went in after 9/11. And that is these folks can project violence against the United States' citizens. And that is something that we cannot tolerate.

But what we can't do is think that just a military approach in Afghanistan is gonna be able to solve our problems. One of the things that we have never done is ramped up the civilian side of the equation with agricultural specialists who can help farmers replace poppy as a crop with people who are able to electrify villages that have never seen electricity. We haven't done some of the diplomatic spade work that needs to be done. So what we're looking for is a comprehensive strategy. And there's got to be an exit strategy. There, there's got to be a sense that this is not perpetual drift and stalemate but in fact that we are making measurable progress with benchmarks in order to achieve our central goal.

KROFT: I mean, it's now been eight years since we won the victory in Pakistan and drove the Taliban out and installed a government there. And now--

OBAMA: In Afghanistan.

KROFT: --we are back-- in Afghanistan. And now we are back almost to square one.

OBAMA: We have seen a deterioration in the situation in Afghanistan that is troubling. It was part of my critique about why we shouldn't have gone into Iraq in the first place. I'm glad that Iraq has stabilized. And it is doing much better. And I think the Iraqi people are better off without Saddam Hussein. But there was a price-- in addition to blood and treasure.

There was a strategic price for us having-- invaded Iraq. And that was that we lost focus on Afghanistan. It's been drifting for years now. And our main challenge, our main issue, has to be really make sure that Bin Laden and his lieutenants aren't plotting to kill Americans. That's our primary national security concern. And I think we've lost sight of that.

KROFT: Do you think that you can achieve this goal? Well-- before I talk-- and there-- I know we don't have a lot of time left. But-- Afghanistan has been-- Afghanistan has proven to be very hard to govern. This should not come as news to anybody given its history.

OBAMA: Right.

KROFT: As the graveyards of empire. And there are people now who are concerned. We need to be careful what we're getting ourselves into in Afghanistan. Because we have come to be looked upon there by-- by people in Afghanistan, and even people now in Pakistan--

OBAMA: Right.

KROFT: --as another foreign power coming in, trying to take over the region.

OBAMA: I'm very mindful of that. And so is my national security team. So is the Pentagon. I mean, you know, Bob Gates is a pretty sophisticated thinker. And he recognizes the risks involved. Admiral Mullen, the Chairman of the Joint Chiefs of Staff, I think understands that history and those risks. That's why it's so important for us to focus on what our goal is, what our central task is. And not start seeing a whole lot of mission creep here. And I-- that's part of the reason why-- although the review is not completed, it's gonna be so important for us to execute a handoff to Afghan forces. And so important for us to work more effectively with Pakistan, which-- has become a safe harbor for these terrorist organizations.

Now-- Pakistan is an ally of ours. In some cases they've been helpful. But they have huge problems of their own. A shaky-- political environment right now. The military in some cases has been a stabilizing force. But in some cases their intelligence services have viewed militant extremist Islamist groups as a tool-- to play off against India or to protect themselves from incursion by outside powers. And so we've got to get our relationship with Pakistan right. It has not been a healthy relationship over the last several years.

KROFT: The government is in the midst of a political crisis right now and under military threat. From the the Pakistani version of the Taliban in-- on the-- in the border region.

OBAMA: Right.

KROFT: The same people that we're fighting in Afghanistan--

OBAMA: Absolutely.

KROFT: --for all intents and purposes.

OBAMA: And-- and part of-- part of what we have to do is change a mindset among Pakistani leaders and the Pakistani people that somehow this is just America's war, that we don't have an interest. What they need to start understanding is that that militant extremist brand of Islam has seeped into-- Pakistan in a way that is profoundly destabilizing. That over time economic growth-- their capacity to maintain law and order-- all those things are threatened. And so they need to be in alliance with us in a much more effective way. And-- that's gonna be one of the major challenges of any approach that we take. And it won't be easy.

I mean, one of the things that-- you know, I have to emphasize is that Afghanistan is not going to be easy in many ways. And this is not my assessment. This is the assessment of commanders on the ground.

Is Iraq was actually easier than Afghanistan. It's easier terrain. You've got a much better educated population, infrastructure to build off of. You don't have some of the same destabilizing border issues that you have between Afghanistan and Pakistan. And so this is gonna be a tough nut to crack. But it is not acceptable for us to simply sit back and let safe havens of terrorists plan and plot to kill Americans-- in the homeland. And that's why this is-- an enormous burden that we're gonna have to bear.

KROFT: One question about Dick Cheney and Guantanamo. I'm sure you want to answer this.

OBAMA: Oh, absolutely.

KROFT: A week ago Vice President Cheney said essentially that your willingness to shut down Guantanamo and to change the way prisoners are treated and interrogator-- interrogated-- was making America weaker and more vulnerable to another attack. And that the interrogation techniques that were used at Guantanamo were responsible for major-- our-- were-- said were essential in preventing another attack against the United States.

OBAMA: I fundamentally disagree with Dick Cheney. Not surprisingly. You know, I think that Vice President Cheney has been at the head of a movement whose notion is somehow that we can't reconcile our core values, our Constitution, our belief that we don't torture, with our national security interests. I think he's drawing the wrong lesson from history.

The facts don't bear him out. I think he is-- that attitude, that philosophy has done incredible damage to our image and position in the world. It makes it more difficult for us to get allies to really go after tough problems as in Afghanistan. And it's not even particularly effective in terms of dealing with the people who have caused us enormous harm. I mean, the fact of the matter is after all these years how many convictions actually came out of Guantanamo? How many, how many terrorists have actually been brought to justice under the philosophy that is being promoted by Vice President Cheney? It hasn't made us safer. What it has been is a great advertisement for anti-American sentiment which means that there is constant effective recruitment of Arab fighters and Muslim fighters against U.S. interests all around the world.

KROFT: Some of it being organized by a few people who were released from Guantanamo.

OBAMA: Well, there's no doubt-- there is no doubt that-- we have not done a particularly effective job in sorting through who are truly dangerous individuals that we've got to make sure are not a threat to us, who are folks that we just swept up. And we never did a good job of sorting through that. We didn't have a structure to do that.

And the reason was because we didn't have confidence in the American legal system. That was the whole premise of Guantanamo. The whole premise of Guantanamo promoted by Vice President Cheney was that somehow the American system of justice was not up to the task of dealing with these terrorists.

I fundamentally disagree with that. Now do these folks deserve Miranda rights? Do they deserve to be treated like a shoplifter down the block? Of course not.

KROFT: What do you do with those people?

OBAMA: Well, I think we're gonna have to figure out a mechanism to make sure that they are not released and do us harm. But do so in a way that is consistent with both our traditions, sense of due process, international law. But this is, this is the legacy that's been left behind. And, you know, I'm surprised that the Vice President is eager to defend a legacy that was unsustainable.

I mean, the fact of the matter was let's assume that we didn't change these practices. How-- how long are we gonna go? Are-- are-- are we going to just keep on holding people without trial, without due process, without sorting through who was guilty and who was innocent? Are we gonna just keep on going until you know, the entire Muslim world and Arab world despises us? Do we think that's really gonna make us safer? I-- I don't know-- a lot of thoughtful thinkers, liberal or conservative-- who think that that was the right approach. And-- what we intend to do is to come up with a responsible approach that's still gonna make some tough choices. And my bottom line is always keeping the American people safe.